Spot natural gas prices (CFDS ON NATURAL GAS) fell in early trading on Wednesday, recording sharp daily losses until the moment of writing this report, by -5.10%. It settled at $ 6.386 per million British thermal units, breaking a series of gains that continued for four consecutive sessions after rising by 6.91% yesterday.
Yesterday, US natural gas futures jumped nearly 5% to reach a two-week high on Tuesday, on expectations of cooler weather and increased heating demand until at least the end of December.
Colder weather is forcing utilities to draw more gas into storage than usual in the coming weeks, at a time when gas inventories are about 1.6% below the five-year average (2017-2021) for this time of year.
However, some analysts don't expect the Freeport plant to return until January, February or later, because it will likely take longer than Freeport expects federal regulators to review and approve the plant restart plan once the company submits it.
US gas futures are up about 86% so far this year, as higher global prices fuel demand for US exports due to supply disruptions and sanctions linked to Russia's war in Ukraine.
Natural Gas Technical Analysis
Technically, the decline in natural gas in its recent trading came as a result of its testing of a bearish corrective slope line in the short term, as shown in the attached chart for a period of time (daily), for the price to reap the profits of its recent rises, and at the same time to try to gain some positive momentum that may help it recover. It breached the bearish slope line, in light of the continued positive support for its trading above its simple moving average for the previous 50-day period, in addition to the presence of positive signals in the relative strength indicators.
Therefore, our expectations suggest that natural gas will rise again during its upcoming trading, especially if it remains stable above 6.412, targeting the 7.548 resistance.
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